Tully's chief quits over cutbacks

Tully's Coffee has a new top executive for the seventh time in as many years.

Carl Pennington, a Tully's franchisee living in Idaho and formerly a Albertsons executive, is taking over as president of the Seattle-based coffee company.

Tully's announced his arrival late Tuesday shortly after news broke that John Buller, its chief executive officer for less than a year and a half, had resigned.

Chief Financial Officer Kristopher Galvin also has resigned from the company.

Buller disagreed with Chairman Tom O'Keefe that cuts in general administrative costs were necessary to bolster the coffee company's finances, said one source who requested anonymity.

About 14 headquarters employees have been laid off in the past month, including the vice presidents of marketing and retail operations. Tully's employs about 130 at its headquarters.

"We have good brand recognition. By streamlining the company and instituting good business practices, I think we can certainly strengthen our bottom line," Pennington said.

Tully's has struggled to become profitable in its 15 years of doing business, accumulating total losses of more than $88 million. It posted a net loss of $3.3 million for its second fiscal quarter ended Sept. 30, deeper than its $2.3 million loss in the year-earlier period.

Tully's had hoped to raise about $34.5 million in an initial public offering last year but indefinitely postponed it in August, citing turmoil in the stock market.

The company said Tuesday it had taken on additional employees in its corporate offices to handle the IPO and now required fewer of them.

Pennington, 69, worked at Albertsons for more than 30 years, ultimately overseeing sales, marketing and merchandising as executive vice president.

He left in 2001 and moved to Boise, from where he operates seven Tully's franchise stores throughout Idaho.

Pennington said Tully's board members approached him about becoming president after Buller's resignation in the past "week or so."

"We have a lot personally invested with the company," Pennington said. "I think it will be a fun position. It's a great company, it has great people, and I'd like to come over and help make it better."

Pennington declined to comment on why he doesn't have the CEO title that Buller had.

Buller's departure means Tully's has gone through six top executives since O'Keefe, the company's founder and largest shareholder, relinquished the CEO title in 2001. O'Keefe was out of the country Tuesday and unavailable for comment, a spokesman said.

Buller, 61, who spent a decade as senior vice president of sales and marketing at The Bon Marché, joined Tully's in August 2006.

His Tully's pay package included a $200,000 annual salary, plus bonuses and a $650 monthly auto allowance, according to a filing with the Securities and Exchange Commission.

Attempts to reach him by phone Tuesday were unsuccessful.

Buller left a job overseeing the University of Washington Alumni Association to replace John Dresel, a former Seattle Sonics executive, who led Tully's as president and chief operating officer for less than two years.

Before Dresel, there was Tony Gioia, a former Baskin-Robbins president, and food-and-beverage industry veteran Jamie Colbourne, who lasted only five months. Marc Evanger, a Tully's board member, was interim CEO for 10 months after Colbourne.

Tully's also announced that its finance chief, Galvin, resigned and is being replaced by controller Andrew Wynne.

Meanwhile, John Rader, previously president of SoCal Bakeries in Santa Ana, Calif., has joined the company as general manager for its supply chain.

Galvin, 54, joined Tully's as CFO in 2002 and held the title of interim principal executive officer for four months in 2004. His 2006 pay package included an annual base salary of $175,000 and a $600 monthly auto allowance, according to an SEC filing.

Although privately held, the company is required to disclose financial results because it has more than 500 shareholders.

Tully's had 142 U.S. coffee shops as of September, up from 123 a year earlier.

It said last week it had formed a joint venture with a company in Singapore to develop the Tully's brand in Australia, New Zealand and Asian countries except Japan.

Tully's much more successful Seattle-based rival, Starbucks, also is going through a management shake-up.

The coffee giant announced last week that Chairman Howard Schultz would return as CEO, replacing grocery industry veteran Jim Donald, who had been CEO for almost three years.

Starbucks shares have lost 50 percent of their value in the past year amid concerns about increased competition from such chains as McDonald's and Dunkin' Donuts and an uncertain U.S. economy.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com